Sunday 28 May 2006 19.03 EDT
First published on Sunday 28 May 2006 19.03 EDT

Last week I had the uncomfortable experience of sounding more nationalistic than Michael Portillo. In a short radio debate between us, Portillo not only abandoned the chauvinistic nationalism for which he was once famous, but appeared sceptical about any plan to revitalise British citizenship. I, by contrast, argued that a progressive nationalism is not an oxymoron and that if we want to preserve an open, liberal society with sufficient solidarity to underpin a generous welfare state, then voters need reassurance that the rights and entitlements associated with their citizenship are protected.

Portillo's shift is part of a larger pattern. Public opinion has been growing more polarised in recent years between, on the one hand, a cosmopolitan minority with a universalist, rights-based, post-national ideology that is comfortable in today's more fluid, pluralist society; and, on the other, a more traditional group that is sceptical about rapid change and more concerned with roots and reciprocity. In newspaper terms, it is the Guardian v the Sun.

Labour's problem is that both groups are part of its historic coalition. On the cosmopolitan side is much of the liberal middle class, and on the traditional side is a large part of the old working class. To try to accommodate both (as well as Britain's settled minorities, who occupy most points along the value spectrum), Labour rhetoric has swung, sometimes alarmingly, between the two poles - from celebrating mass immigration, "cool Britannia" and the Human Rights Act, to tough talking on crime, managed migration and ID cards.

Labour was ill prepared for the rise of the "security and identity" issues when it came to power in 1997. The famous "tough on crime, tough on the causes of crime" slogan and the "rights and duties" approach to citizenship signalled a reasonable attempt to combine liberal principles and tough-mindedness. But, unlike on the economy and tax-and-spend, Labour has found it hard to pull the home affairs policy strands into an effective policy narrative.

Creating a plausible "third way" for the security and identity issues - appealing to both the liberal and the anxious - is hard but not impossible. Contrary to the leftist caricature, those citizens who are anxious about rapid change are not all xenophobes; and contrary to the rightwing caricature, most reasonable liberals accept the need for national borders and for balancing individual rights against national security. Here are five general principles that this third way might start from.

Acknowledge conflicts, cool the temperature. Governments should be more honest about dilemmas - for example, how entrenched individual rights can make it harder for states to act effectively in the public interest - and debate them openly with the public.

The interests of British citizens, of all colours and creeds, must come first. This may seem obvious, but it often conflicts with the assumptions of the internationalist left, the business elite, and the xenophobic right (who refuse to recognise the non-indigenous as full citizens). We may have obligations to all humanity but we have a much more special relationship with fellow citizens. We need borders to protect that specialness. Even in a more interconnected world (and with our commitments to the EU), citizenship must exclude as well as include. Societies are not just collections of random individuals; national cultures are real things (however hard to describe) and need time to adapt to change.

The costs and benefits of immigration are very unevenly distributed. New citizens should be treated with fairness and helped to integrate. Existing citizens' interests count too, especially poorer ones who are most likely to lose out from immigration. There can be legitimate objections, as well as xenophobic ones, to a large number of newcomers arriving in a certain area. To ease the inevitable tensions between immigration and welfare states, benefits and even citizenship itself should, as far as possible, be seen to be "earned".

Individual rights have a collective and political context. Even after big events such as 7/7, due process must prevail; but, equally, unelected judges should at least take account of shifts in public opinion on where to strike the balance between individual rights and collective security.

Strong communities, local and national, are based on shared experience. Liberal, diverse societies are bad at generating such experience and sustaining collective identities. Without an inclusive national story there is a danger of Balkanisation, with people voting and identifying according to race and religion, rather than economic and social interests. Governments should lean against these trends.

The list is incomplete, but the main point is that value differences must not be allowed to split the centre-left coalition, as has happened in the US. That requires politicians to accept that a big part of modern politics is about marrying the twin, and sometimes conflicting, demands of tradition and modernity: the "particularist" commitment to specific norms and national traditions with the universalist, individual-rights culture of markets and law.

· David Goodhart is the author of Progressive Nationalism: Citizenship and the Left, published this week by Demos www.demos.co.uk